One of the common objections I hear from prospective real estate buyers today is that they will buy when their credit score improves. Before I tell you how to improve it, I want to let you know that a credit score in the 500-700 range is not a big deal. I’ve never met anyone with a perfect 850 score and the requirement to get approved here in Los Angeles is a 680 FICO. Here are a few things I advised my clients to do during my time as a mortgage broker:
Obtain your credit report using Credit Karma – I’d like to mention here that I was not paid to refer them. I recommend Credit Karma because they are a free service that gives you a thorough overview of all 3 of your credit scores (Experian, Transunion, and Equifax) and can offer tips on how to improve them. You can’t know how to fix the problem until you find out what you’re dealing with.
Search your credit report for unpaid bills and pay them – Did you move 3 years ago and forget to return your cable box? This happened to me and my case was sent to a collections agency that kept a “ding” on my credit until I paid them back. I know I can’t be the only one that has dealt with this issue. Sometimes, paying a $50 bill can raise your credit 20 points. Worth it? I think so.
Increase your credit line and don’t buy anything – It’s easy to say “just pay off your credit cards” but I know that isn’t easy. What can be easier, however, is contacting your credit card company and asking them for a credit line increase. Credit bureaus put a large emphasis on how large your credit line is and how much you’ve used. If your percentage of used credit goes from 95% to 75%, you’ll see a major boost to your score.
Thanks for reading, and again, don’t worry about a low credit score! It can be fixed!